Higher Ed Is Investing in Sustainability

Some colleges and universities that are early adopters of sustainable investment strategies are supporting their values without sacrificing returns.

Higher Ed Is Investing in Sustainability thumbIS ENVIRONMENTAL, SOCIAL, and governance (ESG) investing good for the bottom lines of U.S. college and university endowments? A report from the Intentional Endowments Network (IEN) looks at 11 higher education institutions that are early adopters of ESG, fossil fuel divestment, or other sustainable investment strategies and finds that fiduciaries are proceeding “without sacrificing financial returns.” The IEN is a peer network of colleges, universities, and institutional investors committed to using investment to create a sustainable economy.

The case studies in the report “demonstrate that it is possible to take a thoughtful approach to ESG factors, have a meaningful impact in driving positive change for institutions’ stakeholders and communities, and maintain or improve investment performance.”

One school reviewed in the IEN report is California State University in Long Beach. According to Aaron J. Moore, CFO of the California State University Foundation, “an ESG mandate best allowed us to align our investments with the university’s values without sacrificing returns. Preliminary results show us up 75 basis points over the benchmark with related fees cut nearly in half.”

The IEN report includes a meta- analysis of research on ESG investing performance, which shows that 90 percent of the studies find ESG investing matched or exceeded traditional performance benchmarks.

“For the first time, we have a collection of real-world cases of college and university endowments implementing sustainable investing strategies and meeting their financial performance targets,” says report co-author Georges Dyer, co-founder and executive director of IEN. He adds that the report shows “endowments large and small can invest for a low-carbon, sustainable future, in ways that reduce risk, enhance returns, and protect [the institutions’] reputations.”

Download “Financial Performance of Sustainable Investing: The State of the Field and Case Studies for Endowments.